Click and Collect: Why Food & Beverage Brands Should Embrace E-commerce
Despite experts’ predictions that online grocery shopping will be a $100 billion business by 2022, many of today’s big food and beverage brands do not yet see e-commerce as a viable sales channel. Typically, when these brands think of e-commerce, they envision customers ordering products from Amazon.com or another online retailer and having those products shipped directly to their homes via FedEx or UPS.
This fulfillment option obviously does not make sense for fragile or perishable food items such as milk, bread and cheese, as these products are likely to be damaged or go bad before they arrive at a customer’s home. For this reason, food and beverage has typically lagged behind other categories in terms of digital adoption.
Today, however, e-commerce now represents this category’s fastest-growing sales channel. Why?
Solving the E-commerce Problem
Today’s largest grocery retailers are now rapidly adopting alternative fulfillment methods that solve the problems associated with food and beverage e-commerce. On the delivery side, many are partnering with services such as Instacart and Shipt to offer same-day and sometimes one- or two-hour delivery. For customers who don’t have the time to wait around for deliveries or who want to check the quality of the items they ordered before paying, click and collect (or buy online, pick up in store) has become a popular option.
The Rise of Click and Collect
Though Amazon’s June 2017 acquisition of Whole Foods Market brought the grocery and e-commerce channels to a very public intersection in the United States, the convergence had been happening for the past decade.
In 2007, Amazon launched a Seattle-based test of AmazonFresh, a pure-play digital grocery shopping experience. AmazonFresh proved ahead of its time, as it took six years for the service to be expanded to other cities. The expansion effort was compounded by the growth of newly launched grocery delivery startups Instacart and Postmates, which were founded during the same period.
Simultaneously, another digital grocery strategy was gaining popularity. This strategy digitally re-imagined the old practice of dropping off a shopping list at the grocery store and picking the items up later in the day.
In the United States, Harris Teeter appears to be the first major grocery retailer to offer click and collect, with a mature service in place by as early as 2011. Kroger acquired Harris Teeter in early 2014, and roughly eight months later, it started testing its own grocery pickup service in Cincinnati. By December 2017, the grocery chain announced its 1,000th ClickList store.
Walmart, which initially piloted online grocery pickup in 2013, also offers the service in about a thousand stores, with plans to double that number by the end of 2018. Amazon launched click and collect for Prime members in August 2018, starting with Whole Foods stores in Sacramento and Virginia Beach.
According to Progressive Grocer, the total number of U.S. grocery retailers adding click-and-collect fulfillment options grew 53% between 2015 and 2016.
Click and Collect vs. Delivery
While home delivery is still America’s preferred fulfillment option, Millennials, who are an indicator of future trends, overwhelmingly prefer click and collect because they can bypass shipping costs and expedite their shopping. This represents a huge online growth opportunity for the food and beverage category, which currently has the lowest click-and-collect purchase rate at 7.8%.
Top Click and Collect Categories
One of the main advantages of click and collect over delivery is that it gives shoppers one final quality assurance check before finishing the transaction. Because of this, fresh and perishable categories have the highest consideration of this fulfillment option.
Moreover, recent Nielsen data shows click and collect orders are heavy on edible items like meat, produce, dairy and frozen. Click and collect is also important for dry, center-store grocery items, which show up in 50% of these shopping trips. While categories purchased via click and collect vary depending on the type of retailer, Nielsen found that shoppers across store types are using click and collect for the essentials: bread, snacks, cheese and milk.
How Brands Can Win
First and foremost, CPG brands need to focus on creating a consistent product content strategy that maintains trust with shoppers. Think about grocery retailers’ apps as an extension of your own website and social media. Do not rely on these retailers to create the high-quality, branded experience consumers are looking. Product photos, titles, descriptions and specifications should all be tailored to the retailer’s audience in a way that helps them make more informed purchasing decisions. Since customers cannot physically see or touch the products, your product packaging and listing page content need to help customers overcome the challenges of shopping for groceries online.
Like any e-commerce platform, retailer websites are essentially search engines, and brands need to optimize their product listings to ensure organic and paid discoverability. As a first step, brands should compile a list of relevant broad and specific keywords they want their products to rank for when customers search on these websites. Components like titles, bullet points, descriptions and any enhanced content should all be optimized to help a CPG get maximum search visibility.
In today’s fragmented retail environment, consumers demand the convenience of shopping online as well as the instant gratification of shopping in stores. Click and collect complements this omnichannel consumer desire perfectly. Food and beverage brands must embrace this new opportunity for growth.